Ridgepost Capital, Inc.

Hello and welcome to the P10 fourth quarter and year-end 2023 conference call. My name is Josh and I will be coordinating your call today. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question and answer session. As a reminder, today's conference call is being recorded. I will now hand the call over to your host, Mark Hood, EVP of Operations and Chief Administrative Officer. Mark, please go ahead.

Good afternoon, and welcome to the P10 fourth quarter and year-end 2023 conference call. Today, we will be joined by Luke Sarsfield, Chief Executive Officer, and Amanda Cousins, Chief Financial Officer. Before we begin, I'd like to remind everyone that this conference call, as well as the presentation slides, may constitute forward-looking statements within the meaning of the federal securities laws, including the Private Securities Litigation Reform Act of 1995. Forward-looking statements reflect management's current plans, estimates, and expectations and are inherently uncertain. Actual results for future periods may differ materially from those expressed or implied by these forward-looking statements due to a number of risk factors and uncertainties that are described in greater detail in our earnings release and in our periodic reports filed from time to time with the SEC. The forward-looking statements included are made only as of the date hereof. We undertake no obligation to update or revise any forward-looking statements as a result of new information or future events, except as otherwise required by law. During the call, we will also discuss certain non-GAAP measures which we believe can be useful in evaluating the company's performance. A reconciliation of these measures to the most directly comparable GAAP measure is available in our earnings release and our filings with the SEC. I will now turn the call over to Luke.

Thank you, Mark. Good afternoon to everyone, and thank you for joining us. On our call today, I'm going to provide an overview of our 2023 performance, share some key observations from my first four months as CEO, and lay out our plan for the year ahead. PTEN delivered strong fourth quarter and full year operating results in 2023, which demonstrated the strength of our strategies and our position as a leading specialized private market solutions platform. In 2023, we generated double-digit top-line growth and strong profitability. For the full year, fee-paying AUM increased by 10%, revenues increased by 22%, and adjusted EBITDA rose by 16%. It bears repeating, P10 surpassed its two-year gross fundraising expectations of $5 billion six months early, and by the end of 2023, we had raised an incremental $2 billion above our original target. Despite the underlying strength of our platform and our positive financial results since going public in 2021, we continue to face pressure on our valuation. Across most metrics, we trade at a meaningful discount to our alternatives peer group. While we believe this presents a compelling entry point for investors, today we are focused on closing that relative valuation gap through strategic execution underscored by transparent communication. We believe that as we articulate and execute on our new strategic initiatives, the market will take notice and reward shareholders. When we talk about our ownership base, it's important to note that P10 employees make up the largest ownership position in our shareholder register. This is a reflection of our collective conviction in the intrinsic value of our platform. We are firm believers that this ownership stake results in strong alignment between the company and our broader shareholder base. During the fourth quarter, we bought back 859,600 shares at an average share price of $9.74. Further, our Board of Directors has approved a $40 million expansion of P10's current share repurchase program. With $10.6 million remaining on our previous $20 million buyback authorization, we now have over $50 million available for repurchases. We have never been more confident in the franchise and its future, and are evaluating every possible avenue to deliver long-term value for our shareholders. Since being appointed CEO in October, I have had the opportunity to holistically engage in almost every aspect of PTEN's operations. That has allowed me to gain a deeper understanding of the organization. It was important for me to get to know our teams and equally as critical for them to get exposure to me. I spent the last two months of 2023 on a listening tour, across a broad array of important constituencies, visiting with them in person, hearing their perspectives, and gaining insights as to what PTEN does well, and learning how we can continue to enhance the organization and its processes. In addition to visiting with each of our strategies in person and engaging with our employees, I had the privilege to spend time with many of our clients and limited partners, both current and prospective, as well as our investors and analysts. With the benefit of that insight, I can say with confidence that P10 is a world-class business made up of the leading minds in the middle market alternative investment space. Moreover, our managers all have a world-class track record of investing excellence that has resulted in high levels of trust with our LPs. Trust is not something we can buy or create in the short term. I take that trust very seriously. and we plan to build on the immense credibility our managers have achieved in this next chapter of our growth. The solid foundation that has been built to date will form the basis of our success going forward. As we look to 2024 and beyond, our strategic priorities are as follows. First, institutionalize our platform and optimize our corporate level organizational structure. Second, Drive increased organic growth by expanding our existing client franchise through programmatic cross-selling and strategic partnerships. Third, implement a robust, disciplined, and process-driven approach to inorganic growth. Fourth, generate operational efficiencies through incentivizing collaboration and leveraging data insights. And finally, enhance our shareholder communications with an eye to greater visibility and transparency. These priorities set the stage for an exciting 2024 as we invest to accelerate profitable growth in 2025 and beyond. We have aggressive goals with a roadmap to achieve them. Executing on our plan will not occur overnight, but progress will be evident as we report each quarter. We also plan to share more about our long-term strategy at PTEN's first investor day in the fall of this year. As I said at the beginning of the call, P10 employees are firmly aligned with our shareholder base. When we execute on this strategy, all P10 stakeholders benefit. Now, let's dive a bit deeper on each of our priorities. First, we are going to institutionalize our platform and optimize our corporate-level organizational structure. In a trust and performance business, our people are our greatest asset, and we must set up an appropriate structure to drive success and accountability in this next phase of our growth. With that in mind, I would like to thank our retiring Chief Operating Officer, Fritz Sauter, for his contributions to PTEN. He was a founding partner at RCP and has done an outstanding job for our limited partners, our shareholders, and our employees. We thank Fritz for all he has done and wish him the very best. Our go-forward corporate level organizational structure has four key functional areas, each led by a senior executive vice president level leader reporting directly to me. Our outstanding EVP, CFO, and CCO, Amanda Cousins, will continue to lead the finance, audit, accounting, legal, and compliance teams. Amanda's contributions to PTEN cannot be overstated. as she has helped build the strong financial and compliance functions that have positioned PTEN for continued organic and inorganic growth. To further augment our legal and compliance framework, she will lead the external search to identify and recruit a general counsel and chief compliance officer to further enhance our PTEN control framework. Mark Hood has been elevated to the role of EVP of operations and chief administrative officer. In this newly created role, Mark will oversee our operations, data and technology, human resources, public relations, and communications, and he will continue in his oversight of our investor relations function. Mark has been foundational to P10 since its IPO, and I am incredibly excited about his expanded role. Next, I am thrilled to report that we have hired a world-class professional to serve as our EVP, head of strategy, and M&A. RJ Jensen is an incredibly talented seasoned professional with over 20 years of experience at Goldman Sachs, Guggenheim Securities, and Perrella Weinberg Partners. RJ will oversee our corporate strategy and lead our corporate development and M&A activities. Inorganic growth will be a core growth driver for P10. RJ will be instrumental in building a scalable M&A blueprint, identifying key strategic opportunities for P10, and executing on M&A transactions. Additionally, we are going to continue to invest in our client franchise. To lead this effort, we are seeking an experienced industry veteran. This person will oversee our client organization, including client relationships, distribution, marketing, and product development, and will work closely with client leaders across our various strategies. As we scale the platform, we're going to build a best-in-class distribution network for our products across strategies. we strongly believe the head of distribution will be critical to maximizing the value of each client relationship. Given the importance of finding the right person for this role, we have retained a leading recruiting firm with deep expertise in this area, and we are working closely with them in earnest to find the right leader for this function. Second, we plan to drive increased organic growth by expanding our existing client franchise through programmatic cross-selling and strategic partnerships. PTEN is fortunate to have a large and growing global LP base, and we need a scalable and replicable process for expanding our influence with current and prospective LPs. Our new head of distribution will be responsible for building this framework to demonstrate progress against our goals. We intend to provide additional details on this topic throughout 2024, culminating at PTEN's inaugural Investor Day this fall. Third, we are implementing a robust, disciplined and process driven approach to inorganic growth. My background is in deal making and in alternative asset management. I've spent decades doing those two things at the highest level and strongly believe that we are positioned to execute deals on a global scale. We plan to increase our footprint, which will also enhance our relationship network. This will mean navigating new jurisdictions and regulations, and that's where we're going to be selective but opportunistic in this pursuit. As our head of M&A, RJ Jensen will leverage his vast experience to re-accelerate our M&A engine. Fourth, we plan to drive operational efficiencies through incentivizing collaboration and leveraging data insights. As we focus on accelerated growth in 2025, we need to ensure our operational structure is optimized and designed to encourage efficiency and collaboration across our strategies. We also plan to share more data with the investment community in a format more aligned to our peers. we will communicate how we are leveraging the collective strengths of our platform more regularly. Finally, we plan to meaningfully enhance our shareholder communications with an eye to greater visibility and transparency. I believe that in order to assess the progress we are making against these previous four initiatives, the investment community needs a clear and understandable framework through which to evaluate PTEN's performance, both on an absolute and a relative basis. As such, we are going to begin rolling out KPIs that allow our key stakeholders to get their arms around the huge opportunity we're capitalizing on. We will have more to report in future quarters as we work through specific details with our audit partners and audit committee, and we look forward to updating you appropriately. Now, let's turn to our outlook for 2024. Starting with fee paying AUM, we anticipate we will organically raise more than $2.5 billion of gross new assets across the platform. We expect double-digit revenue growth that is driven both by this fundraising activity as well as positive fee rate dynamics. We also hope that in 2024, we will announce at least one strategic transaction. As it relates to adjusted EBITDA margin, we expect margins to average in the mid-40s, excluding the effect of acquisitions. There are two dynamics at play here that I'd like to highlight. The first is an ongoing mix shift within our existing portfolio of strategies. As we have previously noted, some of our newer and faster growing businesses such as Bon Accord, Hark, and WTI have lower core adjusted EBITDA margins than other parts of our business. And the overall margin will continue to reflect this evolution. The second influence on margins is the critical and foundational human capital investments we are making in the business. We expect these investments to drive core growth and provide a high ROI for investors. As we move into the new year, we will begin using the common descriptor F R E or fee related earnings in our financial reporting. Before I hand the call over to Amanda, I want to acknowledge some of the recent noise in the marketplace regarding a previously disclosed related party transaction with Crossroads. In step with enhanced transparency, we want to speak directly and clearly on this matter. The transaction was reviewed, approved, and disclosed in keeping with the appropriate governance controls PTEN has in place. PTEN did not invest any capital in Crossroads. The institutional investors who did invest in Crossroads did so on a non-discretionary basis and conducted their own rigorous due diligence. The transition of our founders and former co-CEOs had absolutely nothing to do with the related party transaction. Robert Alpert and Clark Webb will continue in their current roles as executive chairman and executive vice chairman, respectively. Finally, a committee of our independent directors commissioned Wilkie, Farr, and Gallagher, a third-party law firm, to conduct a comprehensive investigation of the transaction. The committee, the broader board, and the law firm all found our governance provisions were properly followed. To close, I want to remind shareholders that the fundamentals of PTEN's business remain exceptionally strong. While we view this year as a table-setting year ahead of acceleration in 2025 and beyond, we are a world-class platform that has momentum across world-class strategies. We are committed to transparency and delivering our investors transparent disclosure. With that, I'll turn the call over to Amanda to further review our financial results.